I read another article today which I think it's very misleading.
I am not going to go through all the content of that article here. My belief is, the author thinks, considering the current credit situation and market crash as the "worst" in history is stupid because market always recover.
Market always recover, it is true, but this idea does not connect to each individual. Imagine if you buy a house and it's very expensive, eventually economy cools down and you don't have enough to pay for mortgage. Your house is foreclosed and you are done. Years later the market recovers and your original house now worth more than the time you bought it. But will that benefit you? Of course not! Because you were foreclosed.
If I need this author to tell me "the market will eventually cover", I AM NO SMARTER THAN A GRADE 5! I bet this author doesn't really know what he wants to say. In his article he quoted Legg Mason's CEO's statement that "it's the worst credit state he has ever seen in 47 years of business", and then the author said 30 years of experience is a blink of history. WHAT THE FUCK, if you take a look at the author's picture, I bet he doesn't live 47 years in his life. But he is criticizing about other people's 47-years of experience based on his bull-shit.
The current market may recover in 3 months or in 3 years, I don't know. Writing an article telling people that market will eventually recover is bullshit. As well, look at Nikkei 225 in Japan, look at Nasdaq Composite. Have they recovered??? I bet there might be some people in the past that thought Nikkei dropped 50% from almost 40,000 to 20,000 was a good buy (because market eventually will recover), only to see that it dropped more, and they have only limited time to sell above 20,000 around 1997. Then they went under water again and it's now sitting at about 13,500 after probably 18 years.
How many 18 years can you live? I bet not many. This article shows you how stupid and naive some people are, even people who write articles. Markets can exist forever, but you don't. Markets may recover, you may not live long enough to see it. Markets may recover, but it may not benefit you. Market recovers is an objective fact. What you own is your subjective measure.
I can bet you that if market starts to recover from here, this author will think he is a genius, he predicted the market correctly. Makes me throw. Based on the article he wrote, I believe this guy is inexperience and stupid.
Tuesday, February 26, 2008
Sane or insane?
I got a bit more FXP at $87, maybe I'm stupid, maybe I'm not.
I tried TWM as well but couldn't get filled, maybe I'm unlucky, maybe I'm not.
Market looks a bit funny. Anyway, funny may not be the good way, as market will go to where it is going, not where you want it to go, unless you have unlimited capacity to drive the market. I don't.
Market rallied with "good" news, if you consider injecting $3billion into Ambac is good news, if you consider IBM using $15 billion to repurchase its own shares is good news, if you consider banks freezed the foreclosures is good news. If you even consider the Fed will lower the rate during the next meeting then it's even better.
Well I read several articles about the Ambac news and I'm kind of agree with 3 points:
1. How can $3 billion help if their positions in credit default swap is as much as $60 billion?
2. Why would the insurance policyholder inject cash into the insurance company so that the insurance company can pay their insurance benefit is good news?
3. How can a company needs external cash injection to save itself can maintain AAA rating?
I need somebody to tell me if I'm wrong or the market is wrong. Or maybe it's just too much shorting since October so it's a mere short covering?
I tried TWM as well but couldn't get filled, maybe I'm unlucky, maybe I'm not.
Market looks a bit funny. Anyway, funny may not be the good way, as market will go to where it is going, not where you want it to go, unless you have unlimited capacity to drive the market. I don't.
Market rallied with "good" news, if you consider injecting $3billion into Ambac is good news, if you consider IBM using $15 billion to repurchase its own shares is good news, if you consider banks freezed the foreclosures is good news. If you even consider the Fed will lower the rate during the next meeting then it's even better.
Well I read several articles about the Ambac news and I'm kind of agree with 3 points:
1. How can $3 billion help if their positions in credit default swap is as much as $60 billion?
2. Why would the insurance policyholder inject cash into the insurance company so that the insurance company can pay their insurance benefit is good news?
3. How can a company needs external cash injection to save itself can maintain AAA rating?
I need somebody to tell me if I'm wrong or the market is wrong. Or maybe it's just too much shorting since October so it's a mere short covering?
Sunday, February 24, 2008
Ambac
Sold my TWM on Friday at $85.71. Haven't sold my FXP and only saw it plummeted back to $88 decimal......
The rumours about bailout of Ambac hit the market late Friday, causing my FXP to decline sharply and fast. Will the insurer be saved I don't know, but market took it as good news and rally. Will this rally last? Still need to check. So far what I saw is the following after market closed on Friday:
1. Many other banks and brokerages reacted to the news as well, but not any one I saw did really break any significant moving average resistents.
2. Ambac itself's volume was not very high. Given the rumours came out on a Friday afternnoon and if that made the shorts very nervous, I expected more volume than that. As well, it didn't push the price above the 20-day EMA.
3. Some stocks are already at or below their January lows. For example, FRE, FNM, LEH. Even worse were among tech stocks like AAPL, GOOG, AMZN, DELL and EBAY.
The bailout of an insurer may help, but I doubt it will help the whole economy. By Monday we should have a better idea of how people react to the news. People believe gap up in Ambac and up in global market are already in the pocket. A more detail analysis should be needed before you think the market is now clear.
The rumours about bailout of Ambac hit the market late Friday, causing my FXP to decline sharply and fast. Will the insurer be saved I don't know, but market took it as good news and rally. Will this rally last? Still need to check. So far what I saw is the following after market closed on Friday:
1. Many other banks and brokerages reacted to the news as well, but not any one I saw did really break any significant moving average resistents.
2. Ambac itself's volume was not very high. Given the rumours came out on a Friday afternnoon and if that made the shorts very nervous, I expected more volume than that. As well, it didn't push the price above the 20-day EMA.
3. Some stocks are already at or below their January lows. For example, FRE, FNM, LEH. Even worse were among tech stocks like AAPL, GOOG, AMZN, DELL and EBAY.
The bailout of an insurer may help, but I doubt it will help the whole economy. By Monday we should have a better idea of how people react to the news. People believe gap up in Ambac and up in global market are already in the pocket. A more detail analysis should be needed before you think the market is now clear.
Saturday, February 16, 2008
Long weekend
This is the first time we in Canada have a long weekend in February, suppose to be nice, just that I have too much work in office that I couldn't take advantage of it..... Anyway....
I bought a bit more FXP at $90.38. As you saw it quickly turned into a loss as of ending of Friday. We still hear positive tune in the market. I couldn't remember where the tune comes from. But I want to say if the tune comes from Wall Street you better second guess again. If Wall Street brokerage firms mainly make money by underwriting old and new issues, they probably would need to make you believe the market will be turning around quickly. Otherwise, how can they make money if you are not buying stocks???
To gain myself more flexibility and control over my own money I would like to sell a bit more mutual funds I have on hand to raise cash for further usage. I think I should manage my own money, not someone else. It means I will have to sell one fund in a loss and one in a gain.
Well but I want to say, it's not about selling at a gain or a loss. It's about take back the control, as well, sell when you should, before it's too late. Even selling 2 more mutual funds I still have long positions, so I'm not totally out from market.
I would like to brainstorm a bit more about the upcoming US president election. I think I have some questions to myself that I couldn't make it clear for now. Maybe I should post those thinking later.
I bought a bit more FXP at $90.38. As you saw it quickly turned into a loss as of ending of Friday. We still hear positive tune in the market. I couldn't remember where the tune comes from. But I want to say if the tune comes from Wall Street you better second guess again. If Wall Street brokerage firms mainly make money by underwriting old and new issues, they probably would need to make you believe the market will be turning around quickly. Otherwise, how can they make money if you are not buying stocks???
To gain myself more flexibility and control over my own money I would like to sell a bit more mutual funds I have on hand to raise cash for further usage. I think I should manage my own money, not someone else. It means I will have to sell one fund in a loss and one in a gain.
Well but I want to say, it's not about selling at a gain or a loss. It's about take back the control, as well, sell when you should, before it's too late. Even selling 2 more mutual funds I still have long positions, so I'm not totally out from market.
I would like to brainstorm a bit more about the upcoming US president election. I think I have some questions to myself that I couldn't make it clear for now. Maybe I should post those thinking later.
Thursday, February 14, 2008
FXP
Well I got into FXP again this morning at $91.75. Ben's comment obviously didn't help the market. Glad to see my TWM rebounded almost 5%. HXD.TO rebounded much less, due to the rise of oil price.
Looks like even Bush, Bernanke and Buffet (all B's, what a coincidence) play Santa Claus doesn't help much. Well that is expected. It is not the end of the world, but downside will continue for a while.
My short position in the meantime is not very big, as I only put a small % to FXP. I guess I'll not reduce my long position further, as a hedge.
In the meantime, I'm not surprise US government will try to control the direction of the market to the upside. But I guess eventually they could run out of options to save the market. After all, a market cannot just keep going up for years without bailing out some irrational behaviour.
Looks like even Bush, Bernanke and Buffet (all B's, what a coincidence) play Santa Claus doesn't help much. Well that is expected. It is not the end of the world, but downside will continue for a while.
My short position in the meantime is not very big, as I only put a small % to FXP. I guess I'll not reduce my long position further, as a hedge.
In the meantime, I'm not surprise US government will try to control the direction of the market to the upside. But I guess eventually they could run out of options to save the market. After all, a market cannot just keep going up for years without bailing out some irrational behaviour.
Tuesday, February 12, 2008
Losers take turn
Well we all know winners take turn, losers take turn too.
During the second half of the year no doubt in US financials and homebuilders were the losers. By that time tech were still strong. Now since 2008 tech followed, dropped more than financials and homebuilders now. Look at today's action. QQQQ started positively, many former high-flyers like GOOG, BIDU or FSLR started well in the morning. Only to see all of them turned red later. AAPL even turned red faster than anybody. Fortunately QQQQ's volume is not that high, so I'm not surprise that QQQQ can go up a bit to test its 50-day EMA. But insofar, it looked like it couldn't even get pass the 20-day EMA.
We all heard about the tax cut, we all saw the interest rate cut, now we see the freeze of foreclosure. That probably could slow down the bust of the problem, but will that solve the long-term problem I doubt.
I don't have exact numbers with me, but I still want to make a guess. It maybe way off so you can just read for fun and don't take it seriously.
Imagine many Americans actually use their home as ATM, it means when their house value decrease they have to pay the banks to maintain their homeowner position. Just that you buy stock on margin and now you get margin calls. Either you deposit cash into your account and maintain the margin or your position will be sold. US is a $15 trillion economy. We always hear that individual consumptions make up 2/3 of US economy. Now this 2/3 is in danger because some people keep spending their unrealized capital gain on their houses without enough cash to maintain the margin.
Banks decided not to force foreclosure. Well sounds okay. But at the end they still need to collect some cash from the homeowner in order to keep their houses. So these people have to save money from now on to pay the margin to a certain level that the banks feel comfortable. Since many people need to squeeze cash from somewhere, the first thing they need to do is to spend less, which hit the whole economy.
Some people have stocks with them probably. So in order to squeeze cash, some of them may decide to sell some stocks to raise cash. After all, a living place is more important than your Google stocks right at this moment.
So what could happen? Banks are delaying their losses. Those suppose-to-be foreclosures are in the meantime, unrealized loss. By the time these people squeeze out enough money to put up the margin, the economy slides by a lot already. Consumer staples and utilities can hold better, but not any other sectors as all kinds of demand will slow down. Banks will then be flood of money that they couldn't loan out, until bank clients with strong credit quality started to initiate loans again.
So I think. How long US economy will stay down really depends on how many people on US land have good credit quality, and how long do other people need to build or rebuild their credit quality to a level that banks are willing to loan money to them again.
During the second half of the year no doubt in US financials and homebuilders were the losers. By that time tech were still strong. Now since 2008 tech followed, dropped more than financials and homebuilders now. Look at today's action. QQQQ started positively, many former high-flyers like GOOG, BIDU or FSLR started well in the morning. Only to see all of them turned red later. AAPL even turned red faster than anybody. Fortunately QQQQ's volume is not that high, so I'm not surprise that QQQQ can go up a bit to test its 50-day EMA. But insofar, it looked like it couldn't even get pass the 20-day EMA.
We all heard about the tax cut, we all saw the interest rate cut, now we see the freeze of foreclosure. That probably could slow down the bust of the problem, but will that solve the long-term problem I doubt.
I don't have exact numbers with me, but I still want to make a guess. It maybe way off so you can just read for fun and don't take it seriously.
Imagine many Americans actually use their home as ATM, it means when their house value decrease they have to pay the banks to maintain their homeowner position. Just that you buy stock on margin and now you get margin calls. Either you deposit cash into your account and maintain the margin or your position will be sold. US is a $15 trillion economy. We always hear that individual consumptions make up 2/3 of US economy. Now this 2/3 is in danger because some people keep spending their unrealized capital gain on their houses without enough cash to maintain the margin.
Banks decided not to force foreclosure. Well sounds okay. But at the end they still need to collect some cash from the homeowner in order to keep their houses. So these people have to save money from now on to pay the margin to a certain level that the banks feel comfortable. Since many people need to squeeze cash from somewhere, the first thing they need to do is to spend less, which hit the whole economy.
Some people have stocks with them probably. So in order to squeeze cash, some of them may decide to sell some stocks to raise cash. After all, a living place is more important than your Google stocks right at this moment.
So what could happen? Banks are delaying their losses. Those suppose-to-be foreclosures are in the meantime, unrealized loss. By the time these people squeeze out enough money to put up the margin, the economy slides by a lot already. Consumer staples and utilities can hold better, but not any other sectors as all kinds of demand will slow down. Banks will then be flood of money that they couldn't loan out, until bank clients with strong credit quality started to initiate loans again.
So I think. How long US economy will stay down really depends on how many people on US land have good credit quality, and how long do other people need to build or rebuild their credit quality to a level that banks are willing to loan money to them again.
Monday, February 11, 2008
Sold SKF and HBU.TO
Market performed pretty strong today that even AIG slashed its earnings. Financials was pretty much the only sector that went down today. Since other sectors are performing strongly, I prefer to sell my SKF first. I sold my SKF at $111.48, not at the highest possible, but pretty good 6.5% over 1.5 weeks. I'm still keeping my TWM, but if market sentiment changes (for a short term) I may want to liquidate it first. I think there are still good chances to set up short positions.
As well I sold my HBU.TO. I guess this is due more to my psychological setback. Want to sell something to realize a gain, as well, trim some long position (which has a gain). I know many people think gold may surpass $1,000 mark, but I rather reserve the money for something that may have a better upside.
I'll keep an eye on SKF and SRS. As well, I only have a small position in TWM, I can see if I can increase the position by a bit, if there is no obvious reason of economic improvement.
I think the market is stabilizing, so possibility of V-shaped movements is getting lower. In this kind of market, either you want to go long or short, you need to be a bit more patient (which I usually don't have.....) to let the trends work out. But since I still see technically it's a bear market, we should wait for the chance to go short than long. The bottom in January looks quite strong. Not that mean the market cannot go lower, just that it may need some more bad news to push it beyond that bottom. So even if you have short position, I currently suggest you to cover it when we reach there.
As well I sold my HBU.TO. I guess this is due more to my psychological setback. Want to sell something to realize a gain, as well, trim some long position (which has a gain). I know many people think gold may surpass $1,000 mark, but I rather reserve the money for something that may have a better upside.
I'll keep an eye on SKF and SRS. As well, I only have a small position in TWM, I can see if I can increase the position by a bit, if there is no obvious reason of economic improvement.
I think the market is stabilizing, so possibility of V-shaped movements is getting lower. In this kind of market, either you want to go long or short, you need to be a bit more patient (which I usually don't have.....) to let the trends work out. But since I still see technically it's a bear market, we should wait for the chance to go short than long. The bottom in January looks quite strong. Not that mean the market cannot go lower, just that it may need some more bad news to push it beyond that bottom. So even if you have short position, I currently suggest you to cover it when we reach there.
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